A Pizza Hut update: stories you may have missed

I covered the “nostalgia trade” a few times last month. The first time, it was concerning McDonald’s (MCD) decision to re-renovate its stores with more old-school appeal – after spending the last 10 years updating them.

Then, on June 20, I noted how:

Despite how Yum! Brands (YUM) just sold the entire chain – which has been struggling for years – I noted how:

And it now looks like that hunch was correct.

Tim Sparks, who’s been running Pizza Hut stores for years, told The Washington Post that several of his re(tro)vamped locations have become top performers. And other franchisees are noticing the difference.

So who knows. We might be seeing nothing but stained-glass lamps soon enough.

After writing Tuesday’s piece about the growing drive against data centers, I do have to speculate that the “blast from the past” appeal might run deeper than mere fondness for a bygone era.

It might be inspired by a growing technology fatigue: the hyper and constant stimulation… the “doom scrolling”… the constant access to overwhelming amounts of information. It’s enough to prompt a small but noticeable number of consumers to turn in their smartphones for “dumb phones” and otherwise turn back their (now old-school) clocks.

As for the majority of us who aren’t quite that disillusioned, we can just turn off our TVs for an hour or two, get in our cars, and drive to Pizza Hut.

Recent polling from Talker Research has shown that 54% of Americans are sick of hearing about artificial intelligence (AI). Maybe not using it in some form or another, but definitely hearing about it.

Apparently, older tech workers are so tired of it that they’re choosing to retire early, according to Fortune. It’s just not worth the effort.

Retirement planning advisor Steve McConnell, founder of Rain Dog Financial, told the publisher that “one of the distinctive features” for tech people “is that the learning curve of getting up to speed on a new technology can be a lot of effort.” So every time a new wave hits, “they need to make a decision whether they want to jump onto the next tech wave and ride that or not.”

In this case, many of them are saying “not,” especially since – according to McConnell – many of them believe AI isn’t all it’s cracked up to be. Or as he put it, “the impact… has been overstated.”

Admittedly, that sentiment is one that even the biggest AI leaders have kinda, sorta been admitting in the last few months. Apparently, these technological advancements won’t destroy all white-collar jobs after all.

They’ll just make them easier, we’re now being told.

With that said, I’m going to have to dissent slightly from this anti-AI narrative in that I don’t think the world’s largest companies would be spending hundreds of billions of dollars on useless or even “overstated” advancements.

Alphabet. Amazon. Microsoft. Meta… These companies didn’t become global titans by investing in nonsense. So completely betting against them now seems ill-advised.

Going into this week, box office watchers already knew that Disney’s (DIS) live-action Moana is an abject failure. Despite a $250 million production budget with another $145 million for marketing, the film had earned less than $108 million globally by Thursday morning.

As it stands, Disney is looking at a $100-$125 million loss for the movie. Some people are even speculating that Moana will mark the end of its live-action remakes altogether.

On top of that, Wells Fargo’s Steven Cahall chose this week to call the company out for its unimpressive market position. The stock is down 24% year over year, and it’s lost 46% over the last five years.

Cahall doesn’t attribute that to film flops, however, despite Disney’s unprecedented number of failures over the last few years. These include:

But Cahall thinks that could all be forgiven if the company would just ditch its Disney+ streaming service:

Part of the problem, as far as he sees it, is that Disney exclusively carries all of its movies and shows. Nobody else is allowed to purchase the streaming rights to anything it owns, such as its animated productions or the Marvel and Star Wars universes.

Cahall believes Disney is simply not structured to be the next Netflix (NFLX) or YouTube, no matter how hard it tries. And it would do better by licensing rights out to streaming platforms that actually know what they’re doing.

While I sincerely doubt Disney will acquiesce to his strongly worded suggestions on its own, it will be interesting to see whether shareholders pick up Cahall’s narrative from here.

Happy SWAN investing!

Brad Thomas
Editor, The Wide Moat Daily

We put together another great Wide Moat Show episode for you this week titled “7 Strong Buys”… two of which come with especially attractive price points.

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